After facing widespread criticism over her handling of the wildfires that ravaged southern California in January, Democratic Los Angeles Mayor Karen Bass is grappling with another crisis as her city faces a widening budget deficit.
The city’s administrative officer, Matt Szabo, warned during a March 19 city council meeting that Los Angeles is currently facing a budget deficit of nearly $1 billion dollars for fiscal year 2025-2026. The budget gap has largely been exacerbated by costly litigation, sizable pay raises for city employees and growing expenses related to wildfire relief.
Szabo said that Bass’ upcoming budget proposal, which will aim to save between $500 and $900 million, will close the deficit, but warned that it will require “extremely difficult cost-cutting decisions.” He added that the city’s growing budgetary problems may necessitate sweeping layoffs.
“We are not looking at dozens or even hundreds of layoffs, but thousands,” Szabo said. “While layoffs may be necessary, it cannot and will not be the only solution.”
“I can tell you that the mayor is absolutely committed to preserving as many jobs and city services as possible, as we face these economic headwinds,” Szabo added.
Bass claimed in a March 19 statement that her city’s budgetary woes have been exacerbated by rising costs associated with a series of wildfires that erupted in January, which killed at least 29 people, destroyed thousands of homes and forced hundreds of thousands of residents to evacuate.
City officials, including Bass, received significant backlash over how public funds were spent prior to the wildfires, as Los Angeles reportedly cut its fire department budget by $17.6 million for fiscal year 2024 to 2025, while simultaneously funding various diversity, equity and inclusion (DEI) efforts.
Bass is currently facing a recall effort largely due to widespread criticism of her handling of the city’s wildfire response.
In her statement regarding the city’s proposed budget, the mayor also called attention to “downward national economic trends” that she said are affecting the city’s finances, as well as “extreme uncertainty” in terms of federal funding.
“I would say that economic ‘uncertainty’ is a shiny object that isn’t real,” John Moorlach, director of the California Policy Institute’s Center for Public Accountability, told the Daily Caller News Foundation when asked about Bass’ comments. “The economy has been moving along, the pension systems have been doing fine in getting their annual projected returns that they need to acquire. The wildfire, that’s a convenient excuse, but economic uncertainty is not. It’s some of these [city employees’] pensions and other post-employment benefits that are coming home to roost.”
On Monday, California lawmakers requested nearly $2 billion dollars from the state legislature to help cover LA’s budget gap and wildfire relief costs, ABC7 reported. Democratic California Gov. Gavin Newsom similarly requested nearly $40 billion in wildfire aid from Congress in February.
Some estimates project that damages from the 2025 wildfires could cost over $250 billion, according to the Los Angeles Times. California’s total funding for fire protection, resource management and fire prevention has increased from $800 million in 2005-2006 to an estimated $3.7 billion in 2021-2022, according to CalMatters.
The mayor was also subject to massive public scrutiny for being overseas in Africa, attending the inauguration of Ghanaian President John Dramani Mahama, when the fires first erupted in Los Angeles County, despite having claimed while on the campaign trail in 2021 that she would not travel overseas if elected. Shortly after Bass returned to the U.S., she was confronted by Sky News reporter David Blevins, who asked if she owed “citizens an apology for being absent while their homes were burning.” Bass notably offered no response to the reporter’s probing.
Moreover, city officials oversaw a fire response crisis as fire hydrants ran dry while the Palisades Fire was raging. Former Los Angeles Fire Department (LAFD) Chief Kristin Crowley was fired by Bass on Feb. 21 after failing to send firefighters to combat the Palisades and Eaton fires, though Crowley also received public backlash over her support for DEI policies within the department.
“Los Angeles is facing a number of challenges,” Patrick Tuohey, co-founder and policy director at the Better Cities Project, told the DCNF. “Not only the costs associated with the LA wildfires, but also a higher number of legal liability claims, most notably for car collisions by the LAPD and the Bureau of Sanitation.”
Los Angeles is expected to pay at least $320 million this fiscal year to settle liability claims and lawsuits, which settles claims and lawsuits against the city over wrongdoings such as injuries and police misconduct, LAist reported. The blue city notably paid out almost $472 million in liability claims between 2020-2023.
“Last year, LA also offered city employees a generous 22% pay increase through 2028 and increased their sick leave payment from 50% to 100%,” Tuohey told the DCNF. “As a result of that increased spending and the deficit it contributed to, the city will likely need to lay off employees and cut services.”
In April 2024, the Los Angeles city council approved new contracts with labor groups, which are expected to total over $1 billion by fiscal year 2028-2029, KFI reported. The city council has also approved significant pay raises for police officers, civilian employees and firefighters, including a four-year, $203 million contract with the union representing LAFD personnel.
While many of LA’s expenses have ballooned in recent years, its general fund revenues have decreased to $13 million below projections as of January, according to a February report from the city’s administrative office.
“It’s just sort of like, we knew that it [LA’s budget crisis] was coming and we could see it coming and evolving, but now it’s really here,” Moorlach told the DCNF.
Bass is expected to release her proposed 2025-2026 budget by April 21.
Bass’ office did not respond to the DCNF’s request for comment.
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